Safdar Hashmi Memorial Trust, New Delhi V. ITO (Hqrt) (E), New Delhi

ITA 3991/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3616 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-06-2010
• Assessment Year: misc
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Assessee Lawyers: S SRINIVASAN
• Keywords: Charitable institution; Retrospective amendment; Set aside
• Section: 80G; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) SHRI RAJPAL YADAV, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3991/DEL./2009 SAFDAR HASHMI MEMORIAL TRUST, VS. ITO (HQRS.)(E) 29, FEROZSHAH ROAD, DELHI. (NEAR RAVINDRA BHAWAN, MANDI HOUSE), NEW DELHI. (PAN : AAATS1295H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. SRINIVASAN, CA REVENUE BY : SHRI B. KISHORE, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF DIRECTOR OF INCOME TAX (EXEMPTIONS), DELHI DATED 24 TH JULY, 2009 U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 READ WITH RULE 11AA OF THE INCOME-TAX RUL ES, 1962. 2. THE GROUND OF APPEAL READS AS UNDER : ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE DIRECTOR OF INCOME TAX (EXEMPTIONS) ERRED IN REFUSI NG TO GRANT EXEMPTION U/S 80G OF THE INCOME-TAX ACT, 1961 DESPI TE COMPLETION OF ALL THE NECESSARY FORMALITIES IN THAT REGARD BY THE APPELLANT. THE ACTION OF THE DIT (E) IS ARBITRARY, ERRONEOUS, PREC IPITOUS AND ILLEGAL AND MUST BE QUASHED WITH DIRECTION FOR GRANT OF REN EWAL OF REGISTRATION. ITA NO.3991/DEL./2009 2 3. THE ASSESSEE TRUST WAS FORMED ON 8.2.1989 TO PER PETUATE THE MEMORY AND WORK OF LATE SAFDAR HASHMI. THE DIT (EXEMPTIONS) R EJECTED THE ASSESSEES APPLICATION FOR GRANTING EXEMPTION U/S 80G BY HOLDI NG AS UNDER :- 5. THE NOTE ON ACTIVITIES FILED BY THE APPLICANT V IDE LETTER DATED 13.5.2009 HAVE ALSO BEEN PERUSED. THE APPLICANT HA S CLAIMED TO HAVE ORGANIZED CONVENTION IN SUPPORT OF GUJARAT VIC TIMS FLASHBACK 2002, STATEMENT FOR DISMISSAL OF GUJARAT GOVERNMENT , RELEASE OF SAHMAT MUKTNAAD ON PREMCHAND, DEBATING EDUCATION & DEBATING EDUCATION-II ETC. IN FINANCIAL YEAR 2005-06, CONVEN TION ON RESERVATION, STATEMENT TO CONDEMN THE SHAMEFUL KILL ING, SYMPOSIUM REWRITING ART HISTORY ICONOGRAPHY ETC. IN FINANCIAL YEAR 2006-07 AND ORGANIZED NATIONAL STREET THEATRE DAY EXHIBITION 1857 AT TEES HAZARI COURT, PRESS CONFERE NCE AT PRESS CLUB OF INDIA, RELEASED A BOOK SITARA GIR PADEGA BY SUDEEP BANERJEE ETC. IN FINANCIAL YEAR 2007-08. THESE ACT IVITIES ARE NOT COVERED BY THE FIRST THREE LIMBS OF THE SECTION 2(1 5) I.E. EDUCATION, MEDICAL RELIEF AND RELIEF TO POOR. THE ACTIVITIES OF THE ASSESSEE, AT THE MOST MAY BE COVERED BY ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY AS MENTIONED IN SECTION 2(1 5). A PROVISO BELOW SECTION 2(15) HAS BEEN INTRODUCED WITH EFFECT FROM AY 2009- 10 WHICH PROVIDES THAT WHERE A CHARITABLE INSTITUTI ON IS ENGAGED IN CHARITABLE ACTIVITY BEING ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, IF SUCH A CHARITABLE INSTITUTION EN GAGES IN ANY ACTIVITY OF TRADE, COMMERCE OR BUSINESS OR PROVIDES SERVICES IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR ANY FEE, CESS OR ANY OTHER CONSIDERATION, ITS ACTIVITIES SHALL NOT BE TAKEN AS CHARITABLE ACTIVITY. 6. EXAMINATION OF THE ACTIVITIES OF THE APPLICANT R EVEALS THAT IT IS ENGAGED IN PURCHASE & SALE OF BOOKS, BANNERS, POSTE RS, CASSETTES, CARDS, MUKTNAAD MAGAZINE, SALE OF PAINTINGS ETC., W HICH IS A SYSTEMATIC BUSINESS ACTIVITY AND THE SAME CANNOT BE SAID TO BE CHARITABLE ACTIVITIES AS PER AMENDED SECTION 2(15). THUS, ITS INCOME WOULD NOT BE ENTITLED FOR EXEMPTION U/S 11 & 12. I N VIEW OF THIS, CONDITIONS MENTIONED IN SECTION 80G(5)(I) ARE NOT S ATISFIED. THUS, APPLICANT IS NOT ENTITLED TO EXEMPTION U/S 80(G)(5) . ACCORDINGLY, REQUEST FOR APPLICANT IS REJECTED. 4. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LE ARNED AR FOR THE ASSESSEE SUBMITTED THAT THE TRUST WAS ESTABLISHED WITH THE F OLLOWING MAIN OBJECTS : ITA NO.3991/DEL./2009 3 I) TO PROMOTE AND STRENGTHEN THE CAUSE OF STREET CO RNER PLAY (NUKKAD NATAK), STAGE PLAY AND FILMS; II) TO PROMOTE AND STRENGTHEN THE CAUSE OF PEOPLES CULTURE THROUGH STREET CORNER PLAYS AND STAGE AND FILMS; III) TO ORGANIZE ACTIVITIES TO PROMOTE PEOPLES CUL TURE TO INVOLVE PEOPLE AT LARGE IN THE ACTIVITIES CONCERNING ART, C ULTURE, LITERATURE THROUGH THEATRE HAVING DEMOCRATIC AND SE CULAR CONTENT; IV) TO DEVELOP SCIENTIFIC TEMPERAMENT AMONG THE PEO PLE THROUGH CULTURE AND ARTISTIC PURSUITS; V) TO PERFORM DRAMAS AND HOLD OTHER CULTURAL SHOWS TO EDUCATE THE MASSES, AND IN PARTICULAR THOSE LIVING IN THE R URAL AND WORKING CLASS AREAS, TO HELP THEM FREE THEMSELVES F ROM THE SHACKLES OF OXTHOROXY, NARROW MINDEDNESS, COMMUNALI SM, EXPLOITATION AND BECOME FREE AND PROGRESSIVE CITIZE NS OF INDIA, AND TO IMPROVE THEIR LIVING STANDARDS; ETC. ETC. IN ORDER TO ACHIEVE THE MAIN OBJECTS OF THE TRUST, CERTAIN PUBLICATIONS OF GENERAL INTEREST OF VARIOUS KNOWN AUTHORS IN THE FIELD ARE PUBLISHED AND PROVIDED TO PEOPLE AT COST. THE POSTCARDS, BANNERS AND OTHER EDUCATIO NAL CASSETTES ARE ALSO BROUGHT OUT ON VARIOUS LEADERS AND SAME ARE SOLD AT COST. THE TRUST IS NOT EARNING ANY PROFIT FROM THESE ACTIVITIES. BY DOING SO, THE ASSESSEE T RUST IS ACHIEVING THE MAIN OBJECTS OF THE TRUST TO PROMOTE AND STRENGTHEN THE CAUSE OF THE PEOPLES CULTURE, DEVELOP SCIENTIFIC TEMPERAMENT AMONG THE PEOPLE THROUGH CUL TURE AND ARTISTIC PURSUITS, TO HELP THEM FREE THEMSELVES FROM THE SHACKLES OF ORTH ODOXY, NARROW MINDEDNESS, COMMUNALISM, EXPLOITATION AND BECOME FREE AND PROGR ESSIVE CITIZENS OF INDIA. THE TRUST ALSO ORGANIZES STREET CORNER PLAYS AND STAGE AND FILMS TO ACHIEVE ITS OBJECTS. BY THE FINANCE ACT, 2008, THERE WAS AMENDMENT IN SE CTION 2(15) IN THE DEFINITION OF THE CHARITABLE PURPOSE WHERE THE FOLLOWING PROVISO WAS ADDED W.E.F. 1.4.2009 :- ITA NO.3991/DEL./2009 4 PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. BY THE FINANCE ACT, 2010, THERE IS A FURTHER AMENDM ENT IN THIS SECTION, WHICH READS AS UNDER :- PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR. THE TOTAL RECEIPT FROM THE SALES OF PUBLICATIONS, C ASSETTES, POSTERS, ETC. DURING THE LAST THREE YEARS WERE BELOW RS.10 LACS, THE DETAILS OF WHICH ARE AS UNDER :- ASSESSMENT YEAR AMOUNT (RS.) 2006-07 9,50,915.00 2007-08 9,64,374.00 2008-09 9,31,089.00 5. ALTHOUGH THE ASSESSEE TRUST IS NOT DOING ANY ACT IVITY WHICH CAN BE COVERED BY THE AMENDED PROVISIONS BY FINANCE ACT, 2008 W.E.F. 1.4.2009, HOWEVER, THE RECEIPTS ARE LESS THAN RS.10 LACS AND AS PER AMENDED PROVISI ONS OF FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1.4.2009 THE AMENDED PROV ISIONS BY FINANCE ACT, 2008 WERE NOT APPLICABLE TO THE ASSESSEES CASE. THIS T RUST WAS ENJOYING THE EXEMPTION U/S 80G(5)(VI) IN THE PAST YEARS. THEREFORE, THE DIT (EXEMPTIONS) IS NOT JUSTIFIED IN REJECTING THE ASSESSEES APPLICATION U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 READ WITH RULE 11AA OF THE INCOME TAX RULES, 1962. 6. LEARNED DR RELIED ON THE ORDER OF DIT (EXEMPTION S). ITA NO.3991/DEL./2009 5 7. AFTER HEARING BOTH THE SIDES AND GOING THROUGH T HE ORDER OF DIT (EXEMPTIONS), WE FIND THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN PURPOSE. IN ORDER TO ACHIEVE THE CHARITABLE PURPOSE OF THE TRUS T, THE TRUST PUBLISHES CERTAIN PUBLICATIONS OF VARIOUS AUTHORS AND SUPPLIED TO THE PEOPLE AT COST. IN FURTHERANCE TO THE CHARITABLE OBJECTS, THE TRUST ALSO DISTRIBUTES POSTCARDS, BANNERS AND OTHER EDUCATIONAL CASSETTES AND SOLD THE SAME AT COST. THE MAIN OBJECTS OF THE TRUST TO PROMOTE AND STRENGTHEN THE CAUSE OF THE PEOPLES CU LTURE AND DEVELOP SCIENTIFIC TEMPERAMENT AMONG THE PEOPLE THROUGH CULTURAL AND A RTISTIC PURSUITS AND MAKE IT NECESSARY TO PUBLISH VARIOUS PUBLICATIONS OF KNOWN AUTHORS AND ALSO DISTRIBUTE POSTCARDS, BANNERS AND EDUCATIONAL CASSETTES AT COS T TO REMOVE THE SHACKLES OF ORTHODOXY, NARROW MINDEDNESS, COMMUNALISM, EXPLOITA TION AND TO MAKE THE CITIZENS FREE AND PROGRESSIVE CITIZENS OF INDIA. THE TRUST ALSO ORGANIZES STREET CORNER PLAYS TO ACHIEVE SUCH OBJECTS. FURTHER, THE RECEIPTS FROM T HE ASSESSMENT YEARS 2006-07 TO 2008-09 WERE BELOW RS.10 LACS. THEREFORE, IN VIEW OF THE AMENDED PROVISIONS BY FINANCE ACT, 2010, THE TRUST DESERVES FOR EXEMPTION U/S 80G(5)(VI) OF THE INCOME- TAX ACT. THEREFORE, WE SET ASIDE THE ORDER OF DIT (EXEMPTIONS) AND DIRECT TO GRANT THE EXEMPTION U/S 80G(5)(VI) OF THE INCOME-TAX ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JUNE, 2010. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 25 TH DAY OF JUNE, 2010/TS ITA NO.3991/DEL./2009 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.DIT (EXEMPTIONS) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.